If you are a newly formed business and have just started out, you might wonder how B-BBEE compliance work, the requirements for B-BBEE and if you have to spend money to comply.
A start-up company will be measured as an Exempted Micro Enterprise (EME) for the first year of trading or Incorporation for B-BBEE purposes.
Start-up Enterprises are deemed to have the same qualifying B-BBEE status as an EME. They will be deemed to have a B-BBEE status of a level 4 contributor with a recognition level of 100%.
The same will apply to a start-up company as to an EME. Should you have 100% Black Ownership, you will qualify as a level one Contributor with a recognition level of 135%, or if you have at least 51% Black Ownership, you will qualify as a level two Contributor with a recognition level of 125%.
A Start-up company will receive this benefit regardless of the estimated/expected turnover of the entity.
To qualify as a Start-up Enterprise, you must provide the following documentation for verification purposes:
- Affidavit confirming that you are a Start-Up Enterprise and that you are in your first year of trading;
- Confirmation of Percentage of Black Ownership;
- Normal Ownership Documentation must be provided.
Suppose you want to tender for a contract as a Start-Up Enterprise or seek any other economic activity covered by Section 10 of the Act with a value higher than R10 Million but less than R50 Million, you will have to submit a Qualifying Small Enterprise (QSE) Scorecard. For contracts of more than R50 Million, you have to submit a Generic Scorecard.
Different B-BBEE sectors have different scorecards, which need to be complied with.
To ensure that you get the best advice regarding your B-BBEE Scorecards, contact your nearest BEE Legal Advisor. Alternatively, leave your contact details on our website, and a SEESA representative will contact you.
About The Author:
Alri Barnard is a BEE and Labour Legal Advisor at the SEESA Kimberley branch. She has been an admitted attorney since 2018. She obtained her LLB law degree in 2015. She also received a Golden Key award for academics, being in the top 15% of the University of The Free State.
Resources:
- Amended Codes of Good Practice under section 9 (1) of B-BBEE Act No 53 of 2003 as Amended by Act No 46 of 2013;
- Geralene Van Wyk Training Manual.